From Sarah Palin, responding to a jab from John Kerry at the Democratic National Convention last night:

I think he diminished himself by even mentioning my name. How does he even know my name? I mean aren’t these guys supposed to be these big wig elites who don’t waste their time on the little people like me — me representing the average American who, yeah I did say in Alaska you can see Russia from our land base and I was making the point that we are strategically located on the globe and when it comes to transportation corridors and resources that are shared and fought over [in] Alaska and I as the governor had known what I was doing in dealing with some international issues that had to do with our resources that could help secure the nation.

Sorry. I couldn't resist. This is just such vintage Palin. Word salad? Check. Palin as victim? Check. Average American? Check. Resentment of those highfalutin elites? Check. It's all there.

The August jobs report is out, and it doesn't have much good news. My usual monthly jobs chart is below: since the economy needs about 90,000 new jobs just to keep up with population growth, I subtract 90,000 from the raw jobs figures to show net new job creation. And what this shows is that we're treading water: net job creation in August was basically zero. The initial June and July jobs numbers were also revised downward a bit.

However, in a reversal of last month, when the headline unemployment number went up (from 8.22% to 8.25%) even though more people were working, this month the unemployment number went down (to 8.11%) even though the jobs data was flat. This is because about half a million people dropped out of the labor force. Oddly, though, this is not because they joined the ranks of discouraged workers. In fact, the number of discouraged workers was down a bit. Long-term unemployment was also down. So there are a few small glimmers of good news here. However, when you dig below the surface of the report it mostly stays pretty bleak. Overall, it looks a lot as if net job creation has slowed to nearly nothing in the past five months.

Is increased production of natural gas from shale deposits good for the environment? At first glance, yes: natural gas releases less CO2 into the atmosphere than coal, so replacing coal-fired electrical plants with gas-fired plants is a win for global warming. And since fracking makes natural gas cheaper, it helps stimulate a switch from coal to gas.

But wait: It turns out you also have to account for leakage. The problem is that natural gas is methane, a powerful greenhouse gas in its own right, and when you extract natural gas from shale formations, some of it inevitably leaks out. That's decidedly bad for global warming. But David McCabe, an atmospheric scientist at the Clean Air Task Force, reports that the news is fairly good on this front: "From the best of the collective work, we believe that burning natural gas for electricity produces about 30-50% less greenhouse gas than burning coal, even accounting for the emissions of methane (and carbon dioxide) from producing and transporting the natural gas."

Unfortunately, the story doesn't stop there, and it gets a lot grimmer as you dig deeper. The problem is simple: If you make something cheaper, people will use more of it. In the case of natural gas, this is fine as long as people are using more of it as a substitute for coal. But that accounts for only a small fraction of natural gas usage:

Less than a third of natural gas is used for electrical generation. Cheap gas will mean more consumption by buildings, industry, and perhaps for transportation. In many of these sectors, cheap gas won’t edge out coal or any other fuel. We'll just burn more of it.

So when you make natural gas cheaper, there's a net benefit from the one-third of it that squeezes out coal but a net loss from the two-thirds that simply represents higher consumption of natural gas. What's worse, even in the power generation market there are tradeoffs:

Cheap shale gas will also make electricity cheaper, increasing consumption, which will chip away at the emission reduction from switching from coal to gas…Quantifying all this requires modeling the effect of unconventional gas on energy markets and emissions, which the International Energy Agency (IEA) recently did. Their report predicts that if these gas resources are widely exploited, globally, CO2 emissions in 2035 will only drop by 1.3%.

…In short, if we assume current policies, shale gas is almost a wash for global CO2, and methane will decrease or eliminate any small climate benefits of shale gas. If cheap shale gas crowds out renewables or increases energy demand more than IEA predicts, or methane leaks are worse than we think, cheap shale gas will actually hasten climate emissions, even in the short term (2035).

Via email, McCabe tells me that the most important factor in the IEA model is crowding out: Cheap shale gas will reduce coal usage (good) but will also reduce development of new nuclear, wind, and solar power (bad). So this is your bad climate news for the day—to go along with shrinking Arctic ice, extreme weather, killer droughts, more wildfires, and monsoons increasingly inundating low-lying areas. Natural gas fracking may be good for North Dakota, but the evidence suggests that, in the end, it won't do much of anything to rein in climate change.

However, let's end on a positive note. McCabe (and the IEA) come to their bleak conclusion only "if we assume current policies." But those policies aren't written on stone tablets. The IEA has a longish set of "Golden Rules" that could make fracking a better environmental bet, and McCabe highlights the two most important of them: (1) Eliminate leaks completely from the natural gas production process, and (2) use carbon sequestration to substantially reduce carbon emissions from gas-fired electrical plants. If we really are going to drill, baby, drill—and all the evidence suggests we are—these two things should become our touchstones for doing it responsibly.

Barack Obama's speech tonight was....OK. But that was about all. It meandered, it skittered, and most of the time it seemed oddly themeless. It had some good lines, but too often they were left hanging. Take this jab at Republicans, for example:

They want your vote, but they don’t want you to know their plan. And that’s because all they have to offer is the same prescription they’ve had for the last thirty years:

“Have a surplus? Try a tax cut.”

“Deficit too high? Try another.”

“Feel a cold coming on? Take two tax cuts, roll back some regulations, and call us in the morning!”

That's a good riff. But it came early in the speech, and after a couple of pro forma sentences about tax cuts for millionaires (he's against them) Obama was off on an entirely unrelated riff about common effort, shared responsibility, and bold, persistent experimentation. Then he was off to the car industry. Then energy. Then a throwaway line about global warming. And all of these riffs were just that: short collections of platitudes with no real meat behind them and no promise of what a second term might bring. Here's the best he could do on deficit reduction:

Now, I’m still eager to reach an agreement based on the principles of my bipartisan debt commission [Simpson-Bowles]. No party has a monopoly on wisdom. No democracy works without compromise. I want to get this done, and we can get it done. But when Governor Romney and his friends in Congress tell us we can somehow lower our deficits by spending trillions more on new tax breaks for the wealthy, well, what’d Bill Clinton call it? You do the arithmetic, you do the math.

I refuse to go along with that. And as long as I’m President, I never will. I refuse to ask middle class families to give up their deductions for owning a home or raising their kids just to pay for another millionaire’s tax cut. I refuse to ask students to pay more for college; or kick children out of Head Start programs, to eliminate health insurance for millions of Americans who are poor, and elderly, or disabled, all so those with the most can pay less.

That's a workmanlike statement. It checks the right boxes. Like the rest of the speech, it got the job done. But I didn't feel any real passion in the delivery. It felt more like an actor soldiering through his lines.

Overall, it was a decent wrapup. It was a decent defense of his first term. It was a decent appeal for votes. But there was nothing memorable, nothing forward looking, and nothing that drew a contrast with Romney in sharp, gut-level strokes. Obama was, to be charitable, no more than the third best of the Democratic convention's prime time speakers in 2012.

Dylan Matthews writes about the big difference between Tampa and Charlotte:

We’re two nights into the Democratic National Convention, and the themes could not be more distinct from those championed at the RNC last week. Whereas the RNC heavily emphasized the role of personal initiative in economic success, the DNC’s speakers have focused on the many barriers that keep success away from even determined, hard-working Americans.

I was thinking about this exact thing last night, and what I was thinking is that it's a shame. It's a shame that Republicans think they have to extol personal initiative to the exclusion of all else, and it's a shame that Democrats feel the same way about the value of collective action and real opportunity for all.

I understand why this happens. Republicans feel that personal initiative is under such withering attack from liberals that they need to fight back with no quarter given and no ground conceded. Democrats feel the same way.

There are lots of topics that display the same dynamic. Hell, maybe most of them. But it seems more corrosive than usual in this case, because it does real damage when we disparage either of these things. Personal initiative and personal responsibility really are vitally important, and we should take every opportunity to encourage and praise them. I've known plenty of people who have started and run businesses of their own, and they work their asses off and take plenty of personal risks along the way. It's not an easy road.

Likewise, lots of people, through no real fault of their own, really don't have much of a chance in life. Those of us who do should always be keenly aware of just how lucky we are and just how much we've benefited not just from friends and family, but from things like clean water, decent healthcare, roads and bridges, public schools and universities, food that's free of contamination, government-sponsored basic research, public order, and, eventually, retirement security.

Reverence for personal initiative without a sense of what you've gotten from others produces too much petty arrogance and unfeeling entitlement. Concern for equal opportunity and community support without a healthy respect for personal initiative produces too much lassitude and bitterness.

This is a case where we truly don't want either side to win — and not out of some misplaced sense of mindless centrism. We really do have to value both, not just pay lip service to them.

Barack Obama is one of the best at bridging these two worlds. It's too bad there aren't more like him.

The stock market, a bit to my surprise, has reacted euphorically to today's official announcement that the European Central Bank will begin unlimited purchases of government bonds from economically depressed countries in the eurozone (though this policy applies only to countries that behave themselves and abide by Germany's austerity dictates — see yesterday's post for more on this). This is, of course, not the first time the euro has been rescued. We've been treated to a long procession of similar announcements before, and I frankly thought that investors had grown a little more jaded toward them by now. But apparently not. They still want to believe.

I've written enough about the eurozone's problems in the past that I'm not really in the mood for another long post on the subject of Europe's currency woes. Instead I'll do a short one and see if anyone tells me I'm wrong. Start with the following axiom:

You can't maintain persistent capital flow imbalances in a fixed exchange rate area.

This is Europe's fundamental problem. For years, capital has flowed out of the core (Germany etc.) and into the periphery (Greece, Spain, etc.), and this can't keep up forever. Basically, one of three things has to happen eventually:

  1. The fixed exchange rate area breaks up. In other words, Europe abandons the euro, the periphery countries readopt their old national currencies, and then promptly devalue them.
  2. The capital flow imbalances have to stop and turn around. This would require that Germany start running a trade deficit and the periphery countries start running trade surpluses.
  3. The capital flow imbalances have to be institutionalized permanently. This can happen either via permanent fiscal transfers from core to periphery (similar to the way the United States maintains permanent fiscal transfers from rich states to poorer states) or via central bank bailouts.

Let's take these one by one. European leaders swear on their mothers' graves that #1 won't happen. They say the euro is "irreversible." There's no sign at all that #2 will happen either. Germany has shown no willingness to abandon its cherished trade surplus, no willingness to tolerate higher inflation, and no willingness to pursue any other course that falls under the general rubric of "internal devaluation." And option #3 is off the table too. Europe's rich countries have demonstrated no desire to permanently subsidize their poorer neighbors, and their voters would revolt if they tried — something that's pretty understandable given the vast sums that would probably be required. Likewise, on the central bank front, today's ECB action is a temporary measure. No one thinks they can (or should) keep it up forever.

So we're in the same place we've always been. Either the eurozone breaks up or else capital flows between the core and the periphery have to be reversed. The former is supposedly off the table and the latter is politically impossible. So what gives first?

My guess is: the eurozone. That seems to be what Wall Street increasingly believes, too. Unless I'm missing something, of course. Am I?

I thought I'd check in with Sam Wang today to see what he thought about Romney's convention bounce, and the news for Republicans isn't good. Not only does he think they got no bounce, he thinks they probably got a negative bounce. In terms of electoral votes, he figures they lost a bit, then gained a bit, and ended up about 10 EV short of where they started:

Fow what it's worth, I'd attribute this partly to a weak convention — Hurricane Isaac, mediocre speeches, Paul Ryan getting a little too carried away with his deceptive claims, Clint Eastwood stealing the limelight from Romney — but mostly to the fact that we simply have a very divided electorate these days, and conventions aren't likely to change too many minds. Add to that the fact that ad campaigns on both sides started running at gale force levels back in May, and the two candidates were pretty well defined long before Romney took the stage in Tampa. My guess is that Democrats will do a little better simply because they have better speakers and are running a tighter convention, but I doubt they're going to see much of a bounce either. We'll know by next week.

Comparing different plans to reduce the deficit is maddeningly difficult. This is because any proper comparison between two plans has to be done against the same baseline — and as soon as you say the word "baseline," you might as well just pack up your bags and go home. You are doomed to a funhouse spiral into insanity as you try disentangle how much Obama's cuts vs. Obama's baseline matches up to Paul Ryan's cuts vs. Paul Ryan's baseline.

For example: if the Bush tax cuts are extended, they'll cost about $4 trillion over the next decade. So if your baseline assumes they get extended, then you can claim $4 trillion in deficit reduction by allowing them to expire. However, by current law they're going to expire on December 31. If you take that as your baseline, you can't claim any deficit reduction at all by allowing them to expire.

There's a sense — a very big sense — in which this is ridiculous. Who cares what the baseline is? The Bush tax cuts will cost $4 trillion one way or the other. That's the price tag for keeping them, and it's the savings for letting them expire. All that matters is one simple thing: what would the deficit be in, say, 2017 if your proposals were enacted? That's it.

But Ezra Klein, in an aside to a longer post, very succinctly explains one of the reasons this stuff gets so many people so animated:

People prefer “tough” cuts to cuts they think are easy (though the cuts in question are rarely tough on the people analyzing them). So they give a lot more credit to, say, raising the Medicare eligibility age, as that hurts seniors, than to officially drawing down the war spending, or cutting interest payments, or banking the results of a deal. But the deficit doesn’t care how much the cuts hurt. It’s all about the bottom-line number.

It's sort of pathological, really. If you save money, you save money. Who cares if you go after the low-hanging fruit first? Nobody should, and yet they do. If your proposed savings aren't something that's likely to concretely hurt someone, they're somehow unserious. Raising the Medicare eligibility age is a real cut; reducing reimbursements to hospitals isn't. Block-granting Medicaid is a real cut; ending the war in Afghanistan isn't. Slashing NIH funding is a real cut; reinstating PAYGO isn't.

But it's not so. None of us should put up with baseline games anymore. Just show us the proposal and show us what the effect will be in five or ten years down the road. Period. That's all that matters. And if you can meet your goal without harming too many people in the process? That should be a point in your favor, no?

Lots of healthcare wonks have been beating the drums to focus a little more attention on Mitt Romney's proposed cuts to Medicaid, which acts as an indispensable backstop to Medicare. Last night, Bill Clinton went there:

Now, folks, this is serious, because it gets worse. And you won’t be laughing when I finish telling you this. They also want to block-grant Medicaid, and cut it by a third over the coming 10 years.

Of course, that’s going to really hurt a lot of poor kids. But that’s not all. Lot of folks don’t know it, but nearly two-thirds of Medicaid is spent on nursing home care for Medicare seniors who are eligible for Medicaid.

It’s going to end Medicare as we know it. And a lot of that money is also spent to help people with disabilities, including a lot of middle-class families whose kids have Down’s syndrome or autism or other severe conditions. And honestly, let’s think about it, if that happens, I don’t know what those families are going to do.

Clinton's specific number is apparently wrong. According to Sarah Kliff, about 40% of Medicaid dollars are spent on nursing home care for seniors, not two-thirds. But Clinton's primary point remains true: at the same time that Romney/Ryan would squeeze Medicare, they'd also squeeze the very program that takes care of the elderly who'd be hardest hit by the cuts. This backstopping function is one reason that Medicaid is a surprisingly popular program: it doesn't just help the poor, it also helps the elderly and the disabled, and is therefore a lifeline for a lot of middle-class families. It's worth making a little more noise about.

It's hard to judge convention speeches when you're a partisan yourself, but it sure seems as if Democrats have the better of things this year on the rhetorical front. Yesterday Michelle Obama gave probably the best speech a first lady has given since Eleanor Roosevelt, and tonight Bill Clinton gave one of the best speeches he's ever given. That's a pretty high bar.

It went long, of course. It was Bill Clinton, after all. But I'll bet the viewing audience loved it. And he sure seemed to be having a great time. He went after Republicans about as hard as anyone has done yet, but he did it with a smile and a real sense of joy at being in the arena. Like this:

In Tampa—did y'all watch their convention? I did. In Tampa, the Republican argument against the president's reelection was actually pretty simple—pretty snappy. It went something like this: We left him a total mess. He hasn't cleaned it up fast enough. So fire him and put us back in.

Later he went after Romney and Ryan on Medicare, making no personal attacks but eviscerating them nonetheless:

Now, there were two other attacks on the president in Tampa I think deserve an answer. First, both Gov. Romney and Congressman Ryan attacked the president for allegedly robbing Medicare of $716 billion…Look, here's what really happened. You be the judge. Here's what really happened. There were no cuts to benefits at all. None. What the president did was to save money by taking the recommendations of a commission of professionals to cut unwarranted subsidies to providers and insurance companies that were not making people healthier and were not necessary to get the providers to provide the service.

…Now, when Congressman Ryan looked into that TV camera and attacked President Obama's Medicare savings as, quote, the biggest, coldest power play, I didn't know whether to laugh or cry—because that $716 billion is exactly, to the dollar, the same amount of Medicare savings that he has in his own budget. You got to get one thing—it takes some brass to attack a guy for doing what you did.

And welfare reform:

Let's look at the other big charge the Republicans made. It's a real doozy. They actually have charged and run ads saying that President Obama wants to weaken the work requirements in the welfare reform bill I signed that moved millions of people from welfare to work. Wait, you need to know, here's what happened. Nobody ever tells you what really happened — here's what happened.

When some Republican governors asked if they could have waivers to try new ways to put people on welfare back to work, the Obama administration listened…And the administration agreed to give waivers to those governors and others only if they had a credible plan to increase employment by 20 percent, and they could keep the waivers only if they did increase employment. Now, did I make myself clear? The requirement was for more work, not less.

…I am telling you the claim that President Obama weakened welfare reform's work requirement is just not true. But they keep on running the ads claiming it. You want to know why? Their campaign pollster said, we are not going to let our campaign be dictated by fact-checkers. Now, finally I can say, that is true. I couldn't have said it better myself.

The whole thing was vintage Clinton. There was plenty of detail in the speech, but it was all delivered with a wink and a chuckle while he stuck in the shiv. Republicans will dutifully attack back, but really, most of them are probably just shaking their heads and wishing they had someone like him in their party.